In this post I’ll talk about how you could determine your consulting fees as a medical professional. Should you set your consulting fee based on what you earn as a clinician or base it on what the client can afford?
Consulting fees are the hourly fees you charge a client in return for you expertise and work. It’s often set on an hourly basis but there are circumstances when it makes more sense to charge a set fee for a particular project.
When you first start out, you may not have much control over your consulting fees because it’s determined by your client. But eventually you’ll be asked how much you will charge for a particular project, where I hope this post will come in handy.
Nature of the Work
A medical group or a health startup may just need to pick your brain as a clinician in order to determine the viability of a product. This is rare. Most of these companies can take a physician friend out for lunch or dinner and gain all the information necessary.
Consulting work is more intricate. You might need to write a summary of a particular topic or review a bunch of data to come up with a an answer for the client.
You might be asked to sit down with the data engineers and the user interface designer to come up with a particular concept. This can be exhausting and your learning curve will be steep.
Just because you’re a physician, it doesn’t mean that you know everything about medicine. Quite frequently you have to do a ton of research before even sitting down with anyone to discuss a particular topic. If you can anticipate this then you can charge for it which will make you and your client happier.
Travel, lodging, and dining expenses should be discussed separately from your hourly fees. It will come across as unprofessional if you mix the two.
If your hourly rate included all sorts of other expenses then it’ll bring down your value. This is the hourly rate you’ll want to advertise to future clients.
Finally, whatever expense you can burden the client with, is money you don’t have to account for on taxes.
The smaller clients, such as health startups, won’t have an admin person who can book your flights and provide you with a stipend for dining and hotel expenses. For these guys, it’s better to pay for everything and then send them an invoice after the project completes.
Don’t be too strict. It’s common for a client to give you a little pushback on some expenses. A little haggling is perfectly normal and expected.
But don’t be too shy about it either. If you weren’t going to spend something normally and only did so because of this consulting gig, then expense it to your client.
For larger clients, have them pay for your expenses directly in order to avoid invoicing. Have them book your travel and lodging and provide you with a card or cash so that you can pay for any food or supplies.
Be professional in this regard because clients are accustomed to their consultants trying to take advantage of them – or, at least, they are paranoid about it.
You don’t need an invoicing software but you’re welcome to use it. Write down the name of the expense, any reference numbers, attach a copy of the receipt, the name of the business, the exact price, and a brief description of what the expense was and exactly why you needed to make that purchase.
This kind of invoice is less likely to be rejected and you won’t get any pushback from the client.
I have had to insist on certain expenses which can feel awkward. But after explaining to the client why, it went over just fine.
Your Consulting Time
There are generally 3 types of work that you’ll do for a client and where your time will be spent:
- face-to-face with the client
- traveling or being on call
There are many time-tracking apps used by lawyers and consultants, so there is no excuse for you to overcharge and make yourself look unreliable. You press a button on the software when you sit down to work and you press pause when you stand up – easy.
Don’t devalue your time but don’t take advantage of a client – that’s a fine balance and for consultants it seems to be a but of an art.
I recommend breaking your time up in 15 minute increments. If you charge $100/hour for consulting work then you’ll charge $25 for 15 minutes. Round up the time.
If you end up needing a lot more time for research than initially anticipated, ping your client and ask them if they’d like you to do so. Let them decide and request a ballpark idea of how much time they are okay with.
Face to Face Time
You might think that the face-to-face time is easy but I’ve been in a couple of situations where I’ve had to just wait around for nothing to happen. I’m sensitive to that because my time is valuable and I can always get some sort of work done, such as writing for this blog, if my time isn’t needed. Having me stand around because the client was unprepared, grinds my gears.
It’s necessary to have these awkward conversation ahead of time. If you are there with a client face-to-face, will you get paid for the entire 4-hour session or will you be on-site for 10 hours and be paid only for whatever time you actually spend with the engineers?
If I’m paid for the entire time when I’m on site then I don’t care how they use my time. I try to be respectful and don’t check my email or work on my own shit while with the client. But if there is a ton of downtime then, of course, I’m not gonna just sit around and grow roots.
It’s rare to have to spend a lot of time traveling for consulting work these days. But it does happen so it’s worth discussing.
Generally, if you are paid for travels and accommodations then you don’t want to charge for travel time. But if your fee is paid hourly and you have to travel to the client on your own dime, you need to charge for your travel time.
The concept here is that you should have respect for your time so that the client respects you. This keeps everything fair and predictable and prevents anyone from feeling butt-hurt.
Determining Your Consulting Fees
When in doubt, start at $100/hour, which is especially safe when you’re new to consulting and don’t know what direction you want to take with your consulting work.
But if you have gained some traction already then it’s fair to charge close to what you are paid as a clinician per hour.
Don’t be so inflexible that you might lose a client because you weren’t willing to lower your prices. Sometimes a good client can bring you more more work in the future. They can refer you to the right people and make your consulting career take off.
A discovery session spent with the CEO can give you a great sense of how your client is doing financially and what they need from you.
Finally, don’t be afraid to provide your client with free information. My rule is that if I can provide the information the client needs in less than hour then I won’t charge for it.
They can take me out to lunch and I’m happy to tell them everything I know and I’ll even do a little research ahead of time, if necessary. This gives the client a taste of what I know and they can decide if I’m even the right fit as a consultant.
$50/hour or $250/hour
Very few clients will be willing to pay you $250/hour unless you have some pedigree. And for that kind of money they will have high expectations.
But if your client doesn’t have very deep pockets, you can set your hourly consulting fees at $50/hour and they’ll likely give you quite a lot more hours in the future. You can always raise your rates in the future. This is perfectly acceptable as you become more effective at what you.
Paying $1,000 to a consultant for a 4-hour session is tough for a health startup, especially if they don’t know what the result will be. But they’ll readily dish out $200 for that same session and realize how valuable your work is and offer you more work in the future.
Consulting Fee per Project
I have 3 consulting clients currently. The first one runs quite a lean budget and so they only need me for a handful of hours every month at $125/hour.
The second company uses me on occasion. They are a telemedicine company. Their engineers will post a question for me and they pay me per question I answer. It’s quite an inefficient way for them to do it but I’m happy to earn the income.
This health startup that I’m currently involved with offered me $5,000 for a 10-day stretch of work in a nearby city. I could have charged them more but neither myself nor they knew whether we could get this project off the ground. Translation: I didn’t have enough faith in myself and they didn’t have enough faith in me.
I brought them a lot more value than the $5,000 they paid me. They also paid for all my travel expenses. I figure that in the future I have some credit with them and they’ll likely use me more.
The Learning Curve
There is a lot to learn about each project you begin before you can even dive in and get any work done on it.
The client usually underestimates the amount of time needed to bring you up to speed which then leaves you with less time to actually do research and then implement your expertise.
The longer you consult, the easier you’ll gauge how much time you need to get up to speed. Realizing this concept helps your client understand why their 5-hour consult didn’t get them as much value as they expected.
In this particular project which I’m involved in, I didn’t spend enough time trying to figure out what I needed to learn. This wasted a lot of time during the consulting work. I had to learn some mathematical models and some machine learning information while trying to work with the engineer on deciphering clinical data.
Next time around, I will ask for a lot more information and I will ask for additional reading material just to get me a sense of how much independent research I need to do. With this knowledge I can then ask for extra money to perform the pre-project research which will make things easier on everyone.